A RegTech revolution

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Our Programme Manager, Adam Brown at Vaiie, has more than 15 years of experience in the digital industry and brings a wealth of knowledge across regulation, FinTech, banking strategy and digital transformation.

We sat down to discuss the challenges facing the industry, emerging trends and how RegTech may evolve…

What are the main challenges for the industry? Hasn’t it been a successful year for digital innovators?

“From an outside perspective, it would look like it’s a perfect year for a digital business – there’s an assumption that everyone is going to need these services – and yes, while they do, people are still thinking short term due to the pandemic, and we’re only just seeing a resurgence back to more strategic thinking.

“Over the last 18 months, people have been forced to focus their efforts weekly because new practical challenges are arising daily. Jersey and international finance centres by their very nature are more cautious when it comes to change and it’s understanding how we can incrementally implement solutions, rather than radical wholesale change.

“What we saw last year was customers needing tools on demand – for example, verifying a new customer the same afternoon. People would flock to what they knew, whether it was a Zoom call or an instant messaging tool to verify someone’s identity because it was accessible and recognisable. There was a general acceptance last year to do what you can to keep businesses moving, however as we find ourselves returning to a longer-term view, the right tools and processes should be defined, providing a secure and consistent base when engaging clients.”

Many people have spoken about the acceleration of digital because of Covid-19, but has it pushed people down the right avenue?

“We’re moving back to certain ways of working, and businesses have proven we can do things remotely, but now it’s a case of taking a step back and pinpointing the right way to do business. We need to return to a more unified way of doing things, and that’s what regulators will be pushing back out to industry. Most businesses did what they had to do last year, but now we need to put a formal process in place.

“It’s an acute trigger event like Covid-19 that creates the need for the immediate and tactical solutions and, as time goes on, this way of working will continue as businesses have proven that they can use those types of technology to do the job. What is becoming apparent is those immediate and tactical solutions are starting to show that they are not as efficient as they should be, for example, not scalable or clunky interfaces. That said, we don’t want to go back. We want to continue to move forward, and businesses need to ensure they are taking the right strategic path, which links back to having the right technology, team, process, culture, vision and investment strategy in place from board level.”

What’s the future of RegTech? Where do you see the space going in the short- and long-term?

“Everyone agrees that there will be more automation and increased adoption of software, ultimately resulting in a higher level of work; however, more automation doesn’t equal fewer jobs. Teams can automate mundane tasks – allowing time for other innovative work and greater workplace flexibility.

“The human element will always be required to make subjective decisions in complex jurisdictions in the Channel Islands, Luxembourg, Singapore – to name a few – as the structures are more complex. The technology will do a lot of thinking but will always require the human ability to make those cognitive leaps that technology isn’t capable of doing in the same way.”

So, this isn’t about job reductions, it’s about creating efficiencies?

“Exactly that. The process of compliance and onboarding is inherently valuable and is a process that keeps executives out of hot water but often comes with laborious processes. For example, the time it takes to request a passport or senior compliance officers chasing for documentation, if these are automated, it allows compliance officers to conduct deeper analysis and investigate client behaviours and risk profiles. Good compliance officers are a costly resource, and their time can be better spent. In a nutshell, it’s about future-proofing business.”

Thinking in an abstract way – where do you think the technology may be in 15-20 years?

“The short to medium term future of RegTech will be determined by international standard setters – they’re trying to keep pace with tech development, but longer-term we must ask ourselves what the concept of identity may look like. Traditionally, we use passports and utility bills as signposts for address verification, but as our identity converges with technology, I do wonder if we are going to switch to a point system approach to prove our identity.

“For example; your passport is 40 points, your address is 30 points, your social media profile 10 points and your purchasing profile 20 points. You can see where identity could become more than just a photo or where you reside – it’s your technological footprint which is exponential, and this could transform into a point-based model, but that’s just a personal theory!”

What are the current industry trends?

“People will always talk about data and the accessibility of data, what we can do with it, and as a result, useability is becoming increasingly important. People want to start a piece of work from home, pick it up in the office and send it from their phone after a gym session or on their way home.

“RegTech isn’t a commodity sale – it needs to be tailored to every individual business whether it’s house style or risk appetite – these aren’t things you can pick up in one meeting – you must work with the client and show you understand the local industry and give them the confidence that your approach is relevant to their market. It’s a slower moving industry that represents long term gains and innovation. Once we form a partnership with a business, we grow and evolve with them. It’s not just about selling software, nor is it a download or plug-in. Vaiie has spent a lot of time refining workflows to ensure we align with international and local regulations, saving our customers a lot of time and resources.

“There isn’t an obvious balance between regulation and elegant design – it’s about doing both things well and finding that harmony in the middle. Regulation presents a baseline that good businesses should adhere to; however, great business occurs from those innovating and operating above and beyond that expectation. We shouldn’t just adhere to the minimum; we should be exceeding it.”

Article first appeared in Connect Magazine Issue 107 on page 66.

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